70% of U.S. Adults Own Portable Entertainment Devices

Music and Communication Top Handheld Content Activities

ARLINGTON, VA, Oct. 3, 2005 – More than 152 million Americans – some 70 percent of the total U.S. adult population – own portable entertainment devices, according to a new report issued today by the Consumer Electronics Association (CEA). The study, titled Handheld Content: Measuring Usage and Subscription Service Opportunities, measured handheld content usage among adults and explored the market opportunities available to companies involved in developing and marketing a wide variety of content for portable devices, such as music, movies, communication applications and games.

“The increasing number of consumers who own portable entertainment devices is creating a huge market for handheld content,” said Steve Koenig, CEA’s senior manager of industry analysis. “In fact, we estimate that consumers who own these devices will spend $8.3 billion on entertainment content for them in the next 12 months. As the mix of options unfolds, it’s important for the industry to understand what content consumers are most interested in, how they prefer to access it and how much they are willing to pay for it.”

Study results indicate that listening to music and communicating with others via email are the most common activities for adults using portable entertainment devices. Some 68 percent of online adults use their devices to listen to music. Wireless phones and notebook PCs are the most common devices used to access handheld content, due in part to the wide variety of content available with these single devices. MP3 players are continuing to gain traction in the market, with household penetration at 15 percent, up from 11 percent in 2004.

The CEA study found that, even though technology and media content are moving rapidly toward the digital domain, much of the content remains in physical form, such as CDs and DVDs. Less than 40 percent of online adults take advantage of digital files downloaded to portable devices directly from the Internet or PC hard drive.

“Although the digital age is upon us, most mainstream consumers are really only ankle deep in the digital pool,” said Koenig. “While consumers are beginning to employ digital content for portable devices, it will likely take years before electronic file folders outnumber CD and DVD cases.”

According to the study, consumers show a reasonable interest in handheld content subscription services. However, lack of awareness may be to blame for the low number of consumers who currently subscribe to such services. Only 16 percent of online adults who own a portable entertainment device subscribe to a service that allows access to content, with 35 percent reporting that they were unaware of any companies that provided such services. This represents a significant opportunity for subscription-based content providers to educate the market and capture additional revenue.

The Handheld Content study was designed and formulated by CEA’s Market Research Department. The quantitative study was administered via Internet web form to an online national sample of 1,724 U.S. adults between August 15 and 22, 2005. The study is available at no charge to CEA members at http://members.ce.org/CeaStore, or for purchase for non-members, at http://www.CE.org.

About CEA:The Consumer Electronics Association (CEA) is the preeminent trade association promoting growth in the consumer technology industry through technology policy, events, research, promotion and the fostering of business and strategic relationships. CEA represents more than 2,000 corporate members involved in the design, development, manufacturing, distribution and integration of audio, video, mobile electronics, wireless and landline communications, information technology, home networking, multimedia and accessory products, as well as related services that are sold through consumer channels. Combined, CEA’s members account for more than $121 billion in annual sales. CEA’s resources are available online at http://www.CE.org, the definitive source for information about the consumer electronics industry.

CEA also sponsors and manages the International CES – Defining Tomorrow’s Technology. All profits from CES are reinvested into industry services, including technical training and education, industry promotion, engineering standards development, market research and legislative advocacy.